The Flip Side of Customer Loyalty: The Case of the Demanding Customer

So, you have done everything that customers might expect from your firm; you have created lots of emotional value, and your customers now reward you with repeat patronage, positive referrals, and virtually all of their business. Congratulations! But, have you thought about the onerous responsibility you have now created for your company and its employees?

I spend a lot of time observing, listening to and watching customers. I have noticed recently a phenomenon that seems to be more and more evident. Many customers now realize their value to a company and are determined to capitalize on it. These are customers who come back to buy from you again and again, and expect to receive some special reward as a result. Possibly because of the sheer volume of material written on the value of loyal customers and possibly also because they are now rewarded for repeat buying by all manner of organizations through so-called “loyalty” programs, returning customers often bring with them an abiding sense of entitlement.

I saw this recently when a couple returning to a vacation hotel for only their second visit were absolutely convinced that they were entitled to an automatic upgrade. Frequent flyers expect to be invited to sit in business class. Returning customers sometimes have a false sense of their own value. They not only expect rewards, they also expect lower prices, and special treatment. At the very least, they crave recognition.

Loyal customers represent the most important asset of a company only to the extent that they continue to bring in business, are prepared to pay higher prices, engage in recommending the firm to friends, and accord the firm a larger share of spend. They can’t hold the firm to ransom and remain valuable.

Such behavior raises the question of whether these demanding customers are truly loyal or just in it for the rewards. It raises the question also of how to deal with them. Do we place their business at risk by refusing to meet their often-unrealistic demands? In the absence of database information that will allow for an accurate estimation of customer value, we often leave it to front-line employees to make decisions on how such situations should be handled. This places them in a very uncomfortable position and leads to the possibility that some customers will be treated unfairly.